SIGFOX Aims to Become "Fourth Protocol"

The Internet of Things market is being stymied by the limitations of today's traditional wireless networks, according to SIGFOX, a network service provider targeting the IoT and M2M device market. While those networks can deliver multimedia content to mobile phones, as well as broadband services on a fixed and mobile basis, they aren't suitable for IoT because of cost, high-energy consumption and complexity, according to this new network operator.

As a result, SIGFOX is working on building out a New IP, software-defined, low-cost, energy efficient network, and has an overarching vision to become what it calls, the "fourth protocol," solely for connecting M2M and IoT devices so that the market can take off.

Thomas Nicholls, executive vice president of communications at Sigfox says today's three connectivity options are "GSM, WiFi, Bluetooth," which means that there is "a definite need to have a global fourth option which basically allows you to get very long battery life, and that's what we aim to achieve." Nicholls described the company's strategy on The New IP's recent Tune in Tuesday radio show. (Listen: SIGFOX: Building an IoT Network.)

"We want to focus on building out a complementary solution that only focuses on simple connectivity that gives a voice to all of these objects that just need to exchange small messages at low cost, low battery life and in a very simple manner," he said.

Nicholls has been with SIGFOX from its beginnings, approximately five years ago. The firm's founding team of M2M veterans recognized why M2M remained a niche play, never achieving the anticipated explosion in devices and set out to address those challenges.

"It was really solving a pain point for ourselves that led us to create this company," said Nicholls. "That initial vision and mission remains the same -- we have never changed strategy in any way." (See SIGFOX's IoT & M2M Mission.)

SIGFOX's model is "basically just a pipe," said Nicholls. "We transport data and it's basically to be seen as a utility." Customers purchase a subscription -- a per year, per device subscription -- and most of its customers are in the range of a $6 to $8 per device per year, he said. "The price depends on volumes so the more you purchase, the cheaper it is."

SIGFOX's network cannot and does not want to provide connectivity for mobile phones or Internet services. Instead the company has focused on providing the connectivity for devices instead. That strict focus enables SIGFOX to have a low-cost architecture and sell connectivity at a low price. "It's really complementary to the connectivity solutions out there," said Nicholls.

Partnerships are key for SIGFOX. The provider partners with mobile operators because they own lots of towers and sites where SIGFOX can install their antennas. In addition, the company works with tower owners.

But its partnerships extend beyond the facilities angle, said Nicholls. "What's even more important in this space is value-added services," he said. "You can walk into a Telefonica shop in Spain and you can buy a security device and those devices use the SIGFOX network. In those situations it makes a lot of sense to not only use the telecommunications network but also the SIGFOX network."

Today the SIGFOX network covers more than 400,000 square miles. The company rolls out through national deployments and has eight countries in Europe almost completely covered. In other parts of the world, the provider has coverage in major cities around the globe and beyond that, roll out depends on incoming projects, according to Nicholls. "We get a good project some place in the world and we quickly find a solution for providing coverage for that region."

Nicholls said the company will be announcing coverage plans on all continents, but the real focus today is finishing up Europe and getting the US covered. "It's no secret that there is a whole market potential that will be unleashed once you have critical mass with regards to coverage."

In the US, SIGFOX plans to connect 10 US cities before the year's end. "We are going to do a very quick network roll out in the US and we'll be announcing quite a few customers and partnerships in the near future."

Since its founding, the startup has raised approximately $150 million in four rounds of funding -- the latest of which, Series D, closed in February 2015. The company is targeting an IPO in mid-2017. "That might result in a new large round of financing," said Nicholls. "The money goes to the network roll out."

Deploying New IP networks and services requires not only a new way of thinking but also a new way of building platforms and services, and getting there is not easy, especially when it comes to orchestration.